Correlation Between Groenlandsbanken and DecideAct

Can any of the company-specific risk be diversified away by investing in both Groenlandsbanken and DecideAct at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Groenlandsbanken and DecideAct into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Groenlandsbanken AS and DecideAct AS, you can compare the effects of market volatilities on Groenlandsbanken and DecideAct and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Groenlandsbanken with a short position of DecideAct. Check out your portfolio center. Please also check ongoing floating volatility patterns of Groenlandsbanken and DecideAct.

Diversification Opportunities for Groenlandsbanken and DecideAct

-0.7

Correlation Coefficient

Groenlandsbanken  DecideAct

Excellent diversification

The 3 months correlation between Groenlandsbanken and DecideAct is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Groenlandsbanken AS and DecideAct AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DecideAct AS and Groenlandsbanken is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Groenlandsbanken AS are associated (or correlated) with DecideAct. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DecideAct AS has no effect on the direction of Groenlandsbanken i.e., Groenlandsbanken and DecideAct go up and down completely randomly.

Pair Corralation between Groenlandsbanken and DecideAct

Assuming the 90 days trading horizon Groenlandsbanken AS is expected to generate 0.24 times more return on investment than DecideAct. However, Groenlandsbanken AS is 4.14 times less risky than DecideAct. It trades about 0.19 of its potential returns per unit of risk. DecideAct AS is currently generating about -0.02 per unit of risk. If you would invest  70,000  in Groenlandsbanken AS on December 26, 2024 and sell it today you would earn a total of  16,000  from holding Groenlandsbanken AS or generate 22.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Groenlandsbanken AS  vs.  DecideAct AS

Groenlandsbanken

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Groenlandsbanken AS are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Groenlandsbanken displayed solid returns over the last few months and may actually be approaching a breakup point.

DecideAct AS

Risk-Adjusted Performance

Very Weak

Over the last 90 days DecideAct AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Groenlandsbanken and DecideAct

The main advantage of trading using opposite Groenlandsbanken and DecideAct positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Groenlandsbanken position performs unexpectedly, DecideAct can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in DecideAct will offset losses from the drop in DecideAct's long position.

The idea behind Groenlandsbanken AS and DecideAct AS pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.